This blog is totally independent and has only three major objectives.
The first is to inform readers of news and happenings in the e-Health domain, both here in Australia and world-wide.
The second is to provide commentary on e-Health in Australia and to foster improvement where I can.
The third is to encourage discussion of the matters raised in the blog so hopefully readers can get a balanced view of what is really happening and what successes are being achieved.

Wednesday, February 17, 2016

This Could Be One Of The Biggest Health Related IT Projects Ever In OZ!

A revived Coalition plan to outsource archaic in-house payments processing technology at Medicare – and potentially claims processing too – has exploded during heated Senate Estimates hearings after the Department of Health admitted it has been working on a stealth payments outsourcing project now in the market.

Both the Health Department and its Minister Sussan Ley this week confirmed the active scoping of a new, commercially provided payments facility for Medicare, a move that had initially been put to the market in 2014 but then appeared to stall.

Specifics surrounding exactly what kind of payments service or outsourced infrastructure Health is shopping for remain somewhat unclear; but what is now known is that a Request for Quotation was quietly issued to eight consultancies including KPMG, Boston Consulting Group, PWC, Ernst & Young and McKinsey.

The quotes are due on Friday 12th February and a decision is expected by the end of the same month.

It is understood that a number of respondents to the initial EoI have been taken by surprise by the revelations of a restricted approach to market as they are still waiting on a response or feedback from the government.

The use of a ‘Request for Quotation’ mechanism also suggests that the government has settled on at least a basic set of technical specifications rather than the more open-ended EoI process.

Concurrently, Health has now created a so-called digital payments taskforce headed by John Cahill, who took the reins in January and has been allocated $5 million and around 20 departmental staff to get the ball rolling.

The raw political sensitivity surrounding the nascent project being linked to the idea of privatising Medicare is acute. Health Minister Sussan Ley on Tuesday raced out a statement declaring that the Turnbull government “remains committed to Medicare” and was only “investigating ways to digitise its transaction technology for payments to a more consumer-friendly and faster format”.

There is understood to be considerable anger within parts of the Coalition over how the issue has been handled by Health, with one adviser saying it was not the first time a health minister had been “thrown under a bus” and that the Opposition had been handed a gift.

Labor has immediately seized on the revelations as proof the Turnbull government is secretly plotting to privatise the universal public health scheme.

The thrust of the Opposition’s attack centres on why Health has been keeping its digital payments efforts under wraps, going so far as to keep its approach to market out of the normally open publication stream of the Department of Finance’s AusTender system – which would have alerted potentially interested parties to the business opportunity – along with Labor and the unions.

Medicare, pharmaceutical and aged-care benefits would be delivered by the private sector under an extraordinary transformation of health services being secretly considered by the Federal Government.

The West Australian has learnt that planning for the ambitious but politically risky outsourcing of government payments is well-advanced, with a view to making it a key feature of Treasurer Scott Morrison’s first Budget in May.

To be put to the market a few weeks later, the $50 billion-plus outsourcing would be the first time the private sector has delivered a national service subsidised by the government.

It would replace back-office operations done by bureaucrats.

They would administer claims and payments while overseeing eligibility criteria, meaning they would require access to people’s sensitive private information.

Doctors would also have to open their books to the provider, , which would be subject to regulatory oversight.

Obviously there is a long way to go on this but, given the billions of dollars processed through these systems it is going to be crucial to get the systems right and to continue with the levels of security, privacy and efficiency we have all become used to with the PBS and MBS.

This will be a project, if it happens, to keep a very close eye on. Given the huge costs that the Commonwealth incurred with the PCEHR for not very much value for money will be a really important issue!

1 comment:

In a life many years ago (the early 1990s) I was asked to look at the application architecture of HIC which included Medibank at the time.

I was told that their applications were a mess and that this had come about because politicians would announce a new initiative with a "death march" go live date.

They had no time to think about architecture, they just started developing. New applications would re-invent the wheel, so e.g. printing was done in a different way each time. Databases were created with no relationship to existing data. There was no such thing as single source of truth.

Changes to existing systems were shoe horned in. Applications were not documented - there was a huge reliance on developers who didn't always fully understand the fine detail of old, but still valid, functionality.

AFAIK, things have not got better over the years.

The questions I have are these:Who knows more about Medicare than Medicare?

Who will be available to talk with the new owners to help them develop new applications? How will these same people be able to maintain and upgrade the existing system when the pollies demand changes?

As I said in a letter published in the SMH:

First it's already been tried and failed. In the late 1990s it was called whole of government outsourcing. It failed then, why would it not fail again?

Second. IT projects have a habit of taking twice as long and costing twice as much as planned. The business case should double the time and cost estimates that the technocrats and bureaucrats come up with - they are always wrong.